India is considering dropping BIS certification requirements for some high-tech manufacturing activities as it wants to attract more advanced manufacturing facilities and strengthen the country’s position as a global production hub.
As such, this would be a paradigm shift in India’s approach to regulating highly sophisticated manufacturing sectors. By reducing certification requirements for some high-tech products and processes that require certification, policymakers are trying to make it easier and faster to attract foreign companies to create advanced production plants in the country.
The prospect of relaxation is part of India’s larger drive to develop domestic manufacturing in electronics, semiconductors, telecommunications equipment, advanced machinery, and other technology-intensive fields.
BIS certification is to ensure that products meet the Indian standards of quality, safety, and performance. Yet manufacturers on the frontiers of technology can face even higher compliance issues if the products are designed for global markets or when the technology is evolving faster than in the home market.
For international companies looking to find manufacturing sites, regulatory efficiency is at the heart of the investment decision. Fast approvals, predictable compliance requirements and fewer duplicated processes make a country more desirable than other manufacturing sites.
India has been actively positioning itself as an alternative manufacturing base for global companies. Make in India and production-linked incentive programmes have encouraged investments in electronics, mobile phones, semiconductor-related industries, and other strategic sectors.
The change in the requirements of BIS could help in that direction and reduce the regulatory friction of advanced manufacturing projects.
High-tech manufacturing facilities require high upfront investment. Specialized equipment, research and development, supply chains, skilled employees, and infrastructure should be capitalized on. Regulatory uncertainty, long certification processes, and the cost of setting up new operations all add up to the time and money.
Thus, a more flexible framework will help India to compete for large-scale projects involving sophisticated technologies.
As such, the proposal would need to be balanced by investment promotion with consumer and industrial safety. Eliminating certification requirements completely, though, would not be suitable for all product types. Then policymakers might look for special exemptions or other ways to ensure product safety for high-technology products that are produced for specific purposes or for export destinations.
Such an approach might help India to attract advanced facilities but still have appropriate standards for products entering the domestic consumer market.
And the opportunity for reform is just as important for India to grow and become a bigger player in global technology supply chains. Advanced manufacturing is now being focused on countries where we can develop skilled labour, infrastructure, reliable supply chains and a business-friendly regulatory environment.
India already has a growing electronics manufacturing ecosystem, and semiconductor and related investments are growing. Promoting more advanced production would take the country from assembly and into higher value manufacturing, engineering, and technology development.
The benefits could be more than just manufacturing facilities. Large technology projects can create demand for component suppliers, logistics providers, engineering suppliers, and specialized workforce training. In the long run, that can form an industrial ecosystem around advanced manufacturing.
International companies also have access to India’s vast domestic market. And the mix of domestic demand and export potential could make the country more competitive in the sector as manufacturers look to diversify their supply chains.
The proposed relaxation of BIS certification should thus be viewed as part of a wider effort to enhance India’s manufacturing environment instead of an individual regulatory change.
If this is handled properly with proper safeguards, it will result in a lower compliance burden, faster project implementation, and greater attractiveness of India’s high-technology manufacturing investment.
The challenge for the government would be to create a regulatory architecture that is flexible, yet does not allow for high levels of creativity with the same safety and quality standards.
With India in constant competition for advanced manufacturing investments, regulatory reforms of this type will be increasingly crucial for multinational companies to decide where to build the next generation of production facilities.
